Learn more about taxes in Mexico in International Living's free daily e-letter, IL Postcards
DTA With U.S.: Yes
Income Tax: Residents of Mexico are subject to Mexican taxation on their worldwide income, which must be declared in an annual personal income tax return. It is charged on a progressive scale of rates up to a maximum of 35%.
Sales Tax: Standard VAT is 15%. The sale of land and residential property is exempt.
Transfer Tax: An acquisition tax is levied on the transfer of real estate. Payable by the buyer, it is currently 2% of the official "assessed" value of the property.
Capital Gains: If the foreign owner has lived on his property for six months prior to the sale (this is the general rule but varies state to state) and can prove this with utility receipts, etc., any gain is exempt from tax. Otherwise, capital gains tax is subject to the discretion of the seller, either 25% of the gross income (sale value) or 32% on the net capital gain.
Rental Income Tax: For residents, rental income is taxable at regular income tax rates. Nonresidents are subject to a withholding rate of 21%.
Property Tax:Mexican property tax is known as predial. Payable quarterly, it averages 0.1% of the assessed value of the property at the time of sale.
Taxes in Mexico
Information on Mexican Taxes
Learn more about taxes in Mexico in International Living's free daily e-letter, IL Postcards
DTA With U.S.: Yes
Income Tax: Residents of Mexico are subject to Mexican taxation on their worldwide income, which must be declared in an annual personal income tax return. It is charged on a progressive scale of rates up to a maximum of 35%.
Sales Tax: Standard VAT is 15%. The sale of land and residential property is exempt.
Transfer Tax: An acquisition tax is levied on the transfer of real estate. Payable by the buyer, it is currently 2% of the official "assessed" value of the property.
Capital Gains: If the foreign owner has lived on his property for six months prior to the sale (this is the general rule but varies state to state) and can prove this with utility receipts, etc., any gain is exempt from tax. Otherwise, capital gains tax is subject to the discretion of the seller, either 25% of the gross income (sale value) or 32% on the net capital gain.
Rental Income Tax: For residents, rental income is taxable at regular income tax rates. Nonresidents are subject to a withholding rate of 21%.
Property Tax:Mexican property tax is known as predial. Payable quarterly, it averages 0.1% of the assessed value of the property at the time of sale.
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